{"id":27390,"date":"2026-06-10T10:30:48","date_gmt":"2026-06-10T05:00:48","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=27390"},"modified":"2026-06-10T10:41:38","modified_gmt":"2026-06-10T05:11:38","slug":"fpi-bond-buying-rbi-tax-reforms-india","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/fpi-bond-buying-rbi-tax-reforms-india\/","title":{"rendered":"Major Reversal: FPIs Buy \u20b910,000 Crore of Indian Bonds in Four Days"},"content":{"rendered":"<p class=\"font-claude-response-body break-words whitespace-normal\"><a href=\"https:\/\/www.pwc.in\/assets\/pdfs\/featured-insights\/foreign-portfolio-investors-destination-india.pdf\" rel=\"noopener\">Foreign portfolio investors (FPIs)<\/a> have poured nearly \u20b910,000 crore into Indian bonds over the last four trading sessions, marking a sharp reversal after weeks of persistent selling. The sudden shift follows a combination of government tax relief measures and RBI steps aimed at making India&#8217;s debt market more attractive to overseas investors.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">Key Takeaways<\/h2>\n<ul class=\"[li_&amp;]:mb-0 [li_&amp;]:mt-1 [li_&amp;]:gap-1 [&amp;:not(:last-child)_ul]:pb-1 [&amp;:not(:last-child)_ol]:pb-1 list-disc flex flex-col gap-1 pl-8 mb-3\">\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">FPIs purchased nearly \u20b910,000 crore worth of Indian bonds in four trading sessions (June 4\u20139), per CCIL data.<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">The government&#8217;s June 5 ordinance scrapped the 20% withholding tax on G-sec interest income and the 12.5% LTCG tax on bond gains, both retroactively from April 1, 2026.<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">RBI expanded FAR to include new 15-, 30-, and 40-year G-secs, and removed concentration limits and short-term investment restrictions.<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">FAR holdings rose from \u20b93.23 trillion on June 3 to \u20b93.32 trillion on June 9, per CCIL data reported by Business Standard.<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Prior to the reversal, FPIs had sold over \u20b910,119 crore of debt since the escalation of the US-Israel war on Iran.<\/li>\n<\/ul>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<figure id=\"attachment_27392\" aria-describedby=\"caption-attachment-27392\" style=\"width: 1672px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2026\/06\/FPI-BUYS-INDIAN-BONDS.webp\" rel=\"noopener\"><img loading=\"lazy\" loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-27392\" src=\"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2026\/06\/FPI-BUYS-INDIAN-BONDS.webp\" alt=\"FPI BUYS INDIAN BONDS-NIFTYTRADER\" width=\"1672\" height=\"941\" \/><\/a><figcaption id=\"caption-attachment-27392\" class=\"wp-caption-text\">FPI BUYS INDIAN BONDS\u2014NIFTYTRADER<\/figcaption><\/figure>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">FPI Sentiment Turns Positive After Weeks of Selling<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Foreign investors have staged a significant comeback in India&#8217;s debt market.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">According to CCIL data, overseas investors purchased close to \u20b910,000 crore worth of bonds across the last four sessions, reversing a trend that had dominated much of the previous month.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The turnaround comes after geopolitical concerns triggered risk aversion across emerging markets. Since the escalation of the US-Israel war on Iran that began on February 28, 2026, FPIs had been net sellers of Indian debt, pulling out more than \u20b910,119 crore. On average, daily selling ranged around \u20b91,000 crore with only sporadic bouts of buying.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The recent buying suggests investors are reassessing India&#8217;s fixed-income attractiveness following coordinated policy support from both the government and the RBI.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">What Triggered the Bond Buying?<\/h2>\n<h3 class=\"text-text-100 mt-2 -mb-1 text-base font-bold\">1. Tax Exemption on Eligible Debt Investments<\/h3>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The government promulgated an ordinance on June 5 amending the Income Tax Act, scrapping the 20% withholding tax on interest income from G-secs and the 12.5% long-term capital gains tax on bond gains held by FPIs. Both exemptions are effective retroactively from April 1, 2026. The ordinance also extends the tax exemption to the <a href=\"https:\/\/www.bis.org\/index.htm\" rel=\"noopener\">Bank for International Settlements<\/a> (BIS), subject to prescribed disclosure requirements.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">For global bond funds, taxation plays a critical role in determining post-tax returns. The dual exemption materially improves India&#8217;s attractiveness compared with other emerging-market debt destinations \u2014 and applies to existing holdings too, given the April 1 backdating.<\/p>\n<h3 class=\"text-text-100 mt-2 -mb-1 text-base font-bold\">2. RBI Expands Investable Bond Universe<\/h3>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The RBI widened investment opportunities for overseas investors by expanding the Fully Accessible Route (FAR). FAR now covers all new issuances of 15-year, 30-year, and 40-year G-secs. Previously, FAR was capped at 10-year tenors, meaning long-duration global passive funds had no eligible instruments in India&#8217;s debt market. RBI also removed concentration limits and short-term investment restrictions for FPIs on the General Route.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">As RBI Governor Sanjay Malhotra stated during the June monetary policy announcement, the measures are designed to deepen foreign participation in India&#8217;s sovereign debt market and facilitate government borrowing at affordable rates.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Together, the two measures have created a materially more supportive environment for foreign participation in Indian debt markets.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">FPI Debt Flows: Before and After Policy Measures<\/h2>\n<div class=\"overflow-x-auto w-full px-2 mb-6\">\n<table class=\"min-w-full border-collapse text-sm leading-[1.7] whitespace-normal\" style=\"height: 132px;\" width=\"736\">\n<thead class=\"text-left\">\n<tr>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" scope=\"col\">Period<\/th>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" scope=\"col\">FPI Debt Flow<\/th>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" scope=\"col\">FAR Holdings (CCIL)<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Post US-Israel-Iran conflict (to June 3)<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">-\u20b910,119 crore<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">\u20b93.23 trillion<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Last 4 sessions (June 4\u20139)<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">+~\u20b910,000 crore<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">\u20b93.32 trillion<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Net swing<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">~\u20b920,000 crore reversal<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">+\u20b99,000 crore in holdings<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p class=\"font-claude-response-body break-words whitespace-normal\"><em>Source: CCIL, Economic Times, Finance Ministry. Data as of June 9, 2026.<\/em><\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">Session-by-Session FAR Inflow Breakdown (CCIL)<\/h2>\n<div class=\"overflow-x-auto w-full px-2 mb-6\">\n<table class=\"min-w-full border-collapse text-sm leading-[1.7] whitespace-normal\" style=\"height: 411px;\" width=\"703\">\n<thead class=\"text-left\">\n<tr>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" style=\"text-align: center;\" scope=\"col\">Date<\/th>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" style=\"text-align: center;\" scope=\"col\">FAR Flow (\u20b9 Crore)<\/th>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" style=\"text-align: center;\" scope=\"col\">Direction<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">May 21<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~200<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">May 22<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~150<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">May 25<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~250<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">May 26<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~-300<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Outflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">May 27<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~150<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">May 29<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~2,700<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">June 1<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~200<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">June 2<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~-300<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Outflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">June 3<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~-600<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Outflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">June 4<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~1,000<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\"><strong>June 5<\/strong><\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\"><strong>~4,500<\/strong><\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\"><strong>Surge \u2014 Ordinance Day<\/strong><\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">June 8<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~3,300<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">June 9<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">~1,000<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\" style=\"text-align: center;\">Inflow<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p class=\"font-claude-response-body break-words whitespace-normal\"><em>Source: CCIL. The June 5 single-session spike is the largest in the two-week window and directly coincides with the ordinance gazette notification date.<\/em><\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">Bond Yields React to Fresh Foreign Demand<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Bond prices and yields move inversely; when investors buy government securities aggressively, bond prices rise and yields fall. India&#8217;s 10-year G-sec yield fell to approximately 6.9%, a four-week low, down from around 7.1% just before the ordinance. The RBI held the repo rate unchanged at 5.25% at its June meeting, meaning the yield decline is entirely demand-driven, not a rate-cut effect.<\/p>\n<h3 class=\"text-text-100 mt-2 -mb-1 text-base font-bold\">Why Falling Yields Matter<\/h3>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Lower yields can:<\/p>\n<ul class=\"[li_&amp;]:mb-0 [li_&amp;]:mt-1 [li_&amp;]:gap-1 [&amp;:not(:last-child)_ul]:pb-1 [&amp;:not(:last-child)_ol]:pb-1 list-disc flex flex-col gap-1 pl-8 mb-3\">\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Reduce government borrowing costs<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Improve system-wide liquidity conditions<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Support corporate bond issuance<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Strengthen confidence in India&#8217;s fixed-income market<\/li>\n<\/ul>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">The Bloomberg Global Aggregate Angle \u2014 The Bigger Story<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">India has been progressively integrated into global bond indices over the past two years. It entered the JPMorgan GBI-EM Index in June 2024, the Bloomberg EM Local Currency Bond Index in January 2025, and the FTSE Russell Emerging Market Index in September 2025.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The fourth and largest, the Bloomberg Global Aggregate Index, tracked by nearly $3 trillion in passive assets, deferred India&#8217;s inclusion in January 2026, specifically citing unresolved tax processes and settlement-related friction as the key concerns.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The June 5 ordinance directly addresses the tax piece. Bloomberg Index Services has committed to providing a mid-2026 update on India&#8217;s status. A 1% weight allocation in the Bloomberg Global Aggregate could translate into approximately $25 billion of inflows, spread over roughly 10 months. That is the structural bet global funds are beginning to price in, and it explains why the post-ordinance buying has been swift and concentrated.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">NiftyTrader Data Angle: Why Debt Flows Matter for Equity Investors<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Many equity investors ignore bond flows, but foreign debt participation often provides important clues about broader global sentiment toward India.<\/p>\n<h3 class=\"text-text-100 mt-2 -mb-1 text-base font-bold\">What Investors Should Monitor<\/h3>\n<div class=\"overflow-x-auto w-full px-2 mb-6\">\n<table class=\"min-w-full border-collapse text-sm leading-[1.7] whitespace-normal\" style=\"height: 173px;\" width=\"729\">\n<thead class=\"text-left\">\n<tr>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" scope=\"col\">Indicator<\/th>\n<th class=\"text-text-100 border-b-0.5 border-[hsl(var(--border-300)\/0.6)] py-2 pr-4 align-top font-bold\" scope=\"col\">Why It Matters<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">FPI Debt Flows (FAR)<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Shows global confidence in India&#8217;s macro<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">FII Equity Flows<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Indicates overall risk appetite<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">10-Year G-Sec Yield<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Signals government borrowing costs<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">RBI Liquidity Operations<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Impacts system-wide liquidity<\/td>\n<\/tr>\n<tr>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">USD\/INR Trend<\/td>\n<td class=\"border-b-0.5 border-[hsl(var(--border-300)\/0.3)] py-2 pr-4 align-top\">Influences FPI net returns in dollar terms<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p class=\"font-claude-response-body break-words whitespace-normal\">When foreign investors increase debt exposure alongside improving equity flows, it often signals growing confidence in macroeconomic stability, and can act as an early leading indicator for equity market sentiment.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">\ud83d\udc49 <a href=\"https:\/\/www.niftytrader.in\/fii-dii-data\">Track daily FII-DII activity and institutional money flows on NiftyTrader&#8217;s FII-DII Dashboard.<\/a><\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">\ud83d\udc49 <a href=\"https:\/\/www.niftytrader.in\/nse-option-chain\">Monitor bond-sensitive sectors and market positioning using NiftyTrader&#8217;s Option Chain and Market Dashboard.<\/a><\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">The Macro Backdrop: How Bad Was the Selling?<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">To appreciate the scale of the reversal, the context matters. According to NSDL data, FPIs have net sold approximately \u20b92.2 lakh crore from Indian equities in 2026 through mid-May, already exceeding the \u20b91.66 lakh crore in total FPI outflows recorded across all of 2025. The selling was broad-based, hitting both equities and debt.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The primary trigger was the US-Israel war on Iran, which drove crude oil sharply higher, pushed the rupee to a record low of near \u20b996.79 per dollar on May 20 (per Wise exchange rate data), and caused a broad emerging-market risk-off. The rupee was trading near \u20b995.36 as of June 10. The current inflow burst represents the first meaningful policy-driven interruption to that trend.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">What Could Derail the Rally?<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Despite the recent surge in inflows, risks remain:<\/p>\n<ul class=\"[li_&amp;]:mb-0 [li_&amp;]:mt-1 [li_&amp;]:gap-1 [&amp;:not(:last-child)_ul]:pb-1 [&amp;:not(:last-child)_ol]:pb-1 list-disc flex flex-col gap-1 pl-8 mb-3\">\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Re-escalation of the US-Israel-Iran conflict in West Asia<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Higher US Treasury yields narrowing the India-US spread<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">A stronger US dollar pressuring rupee and FPI net returns<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Unexpected domestic inflation pressures<\/li>\n<li class=\"font-claude-response-body whitespace-normal break-words pl-2\">Delayed resolution of Bloomberg&#8217;s settlement and operational concerns<\/li>\n<\/ul>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Any of these factors could reverse risk appetite and trigger renewed outflows from emerging-market debt. The rupee remains a particularly live risk, any deterioration from current levels directly erodes FPI bond returns when converted back to dollars.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<h2 class=\"text-text-100 mt-3 -mb-1 text-[1.125rem] font-bold\">Bottom Line<\/h2>\n<p class=\"font-claude-response-body break-words whitespace-normal\">Foreign investors have reversed course dramatically, buying nearly \u20b910,000 crore worth of Indian bonds in just four sessions after weeks of persistent selling.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The government&#8217;s June 5 ordinance, scrapping the 20% withholding tax and 12.5% LTCG tax on G-secs retroactively from April 1, combined with the RBI&#8217;s FAR expansion to 15-, 30-, and 40-year tenors, has restored immediate confidence in India&#8217;s debt market.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">FAR holdings have climbed from \u20b93.23 trillion to \u20b93.32 trillion in under a week per CCIL data, and the 10-year yield has cooled to a four-week low of approximately 6.9%.<\/p>\n<p class=\"font-claude-response-body break-words whitespace-normal\">The bigger structural question now is whether India&#8217;s pending Bloomberg Global Aggregate inclusion, a potential $25 billion trigger, is closer after the tax friction that held it back has been cleared.<\/p>\n<hr class=\"border-border-200 border-t-0.5 my-3 mx-1.5\" \/>\n<p class=\"font-claude-response-body break-words whitespace-normal\"><em>This article is for informational and educational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making investment decisions.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Foreign portfolio investors (FPIs) have poured nearly \u20b910,000 crore into Indian bonds over the last four trading sessions, marking a sharp reversal after weeks of persistent selling. The sudden shift follows a combination of government tax relief measures and RBI steps aimed at making India&#8217;s debt market more attractive to overseas investors. Key Takeaways FPIs [&hellip;]<\/p>\n","protected":false},"author":11,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[1693,2698,2930,2705,1690],"ppma_author":[1523],"class_list":["post-27390","post","type-post","status-publish","format-standard","has-post-thumbnail","category-stock-market-news","tag-bond-market","tag-debt-market","tag-fpi-flows","tag-government-securities","tag-rbi"]," _eael_post_view_count":0,"authors":[{"term_id":1523,"user_id":11,"is_guest":0,"slug":"nikki","display_name":"Nikki Lodha","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/ae2e265bd56e0e890c866fbaa55d29846ba20cc5372adf666652268816af117e?s=96&d=mm&r=g","first_name":"Nikki","last_name":"Lodha","user_url":"https:\/\/www.niftytrader.in\/markets\/","author_category":"","description":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/27390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=27390"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/27390\/revisions"}],"predecessor-version":[{"id":27393,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/27390\/revisions\/27393"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/27391"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=27390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=27390"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=27390"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=27390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}